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Canadians are getting comfortable with debt levels, as household credit growth made a slight acceleration. Bank of Canada (BoC) numbers show the balance of household debt printed a new record in April. The new record high came with minor acceleration of the annual pace of growth for both mortgage and consumer credit.

Canadians Had $2.18 Trillion In Debt In April

Canadian household debt held by institutions reached a new all-time high. The outstanding balance reached $2.18 trillion in April, up 0.23% from the month before. This represents a 3.32% increase compared to last year. Month-over-month, this is the biggest increase since December 2018. The 12 month rate of growth has also increased over the past two months. Not quite enough acceleration to indicate a turn of trend, but worth watching.

Canadian Household Debt Outstanding, Percent Change

The annual percent change of total debt held by Canadian households, in Canadian dollars.

Source: Bank of Canada, Better Dwelling.

Over $1.55 Trillion of The Debt Is On Mortgages

Mortgage debt, the largest component of household debt, also reached a new high. The balance outstanding reached $1.55 trillion in April, up 0.20% from the month before. The balance has increased 3.25% over the past 12 months. The 12 month trend has increased over the past 2 months, but still falls 30.66% short of growth compared to the same month last year.

Canadian Household Debt Outstanding In Dollars

Total debt held by Canadian households, in Canadian dollars.

Source: Bank of Canada, Better Dwelling.

Canadians Owe Over $621 Billion In Consumer Debt

Consumer debt surged, but still falls short of the all-time high. The outstanding balance of consumer credit hit $621.79% in April, up 0.31% from the month before. The annual pace of growth reached 3.50%, marking a second consecutive increase. This is the largest monthly increase since September 2018.

Canadian Household Debt Change

Annual percent change in debt held by Canadian households.

Source: Bank of Canada, Better Dwelling.

Household debt reached a new record high, and growth is experiencing minor acceleration. It’s difficult to tell if growth is actually returning, or if this is a brief pause before resuming a downtrend. The 12 month rate of growth is still just a few basis points above record lows not seen in decades.

23 Comments

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Mortgage rates falling to CPI targets, basically paying people to take loans now. Last capital reallocation before they factor losses.

I’m guessing you pay to intro teaser loans, they renew in two years higher. Most people continue paying their bills, but 2-4% default. Still profit. Booyah. Unless you’re a household, then sorry for your loss.

Agreed! In fact, if you look at graphs 1 and 3 (percent change in household debt), it looks like we could be on the verge of a RECESSION.

Graphs 1 and 3 show that recessions occur when the rate of change of debt (slope) turns negative. The rate of change of debt starts to turn negative beginning in Aug 2017, though so far the effect is smaller than during previous recessions.

Noone knows the future. Rates can go up or they can go down. Agree if rates go up – it will screw lot of people who don’t plan properly. But if rates don’t go up those people will win.

Anyhow still would be useful to see cost of carrying debt graph which will give us current debt situation in historical context, but obviously won’t tell anything about future, because nobody knows what will happen to interest rates

Ironically, this is something we were seeing repeated around ~2005 in the US.

Debt rises when rates are held low for too long. Everyone says, oh look – you’re not looking at the cost of carrying it. You still don’t have liquidity when you try to sell at a certain point if credit is crashing. In the US, fewer than 10% of people were highly indebted in the leadup. That doesn’t stop a major kink in the system that impacts other people that weren’t.

never knew we have so many economists here on BD… you guys must be doing really really well in your real life… with so much knowledge about economy and interest rates lol… buying a house in Toronto must be like a walk in the park for ya’ll… I am just happy put 30% of my saving in index etf and 70% into pre-constructions~

BD is a data-driven site. The problem with boosters like you and Mmr is that you never give any data to back up your assertions. (And please, TREB is not a credible source.) That’s because, as has been said over and over again, the fundamentals do not support the market. This is textbook irrational exuberance. In fact, you yourself said you go with your gut on these things. But tell me, are you so insecure about that gut of yours that you try to make yourself feel better by bashing the decisions of those that do otherwise?

the only thing i learned in my third year investment class is that 99% of the people can’t beat the market and if your investment horizon is long, your gain will eventually overcome your losses (I graduated with a b.com)

I don’t pretend to be some guru who knows everything because I don’t have billions of dollars in the bank as proof.

I don’t over-extend and I only buy one at a time. It’s important to set your goals right. I want to retire at 55 with 10 sets of tenant. and I am well on track to get that. the overall mood is too gloomy here. I live and work in downtown. none of any good restaurants have empty seats on the weekend. this city is doing well.

maybe some people (not saying it’s you) are stuck in life and not going anywhere, but hey, it’s capitalism, may the best player win~~ it’s a tournament poker, not one hand decides all. live long and prosper my friend

ZZ talks too much about himself and so doesn’t pass the smell test…Good luck in life ZZ I think your in for a big awakening when your house of cards comes tumbling down..and find yourself stuck in life not going anywhere…but hey that’s capitalism. 😉